Full Throttle

Two articles this week in The Motley Fool explore the practice of “throttling” at online-DVD-rental outlets Netflix and Blockbuster. Basically, if you watch and return a certain number of movies a month, you’re likely to experience longer turn-around times and reduced availability.

At first, this sounds like bad business. Why piss off your most loyal customers? Ummm ... because they drive up costs:

“Netflix probably wouldn’t mind losing those being throttled. If you’re blazing through 20 flicks a month on Netflix, you’ll do it a favor by going to Blockbuster and knocking that company one step closer to bankruptcy.”
But the initial thought is still valid: In the long run, driving away or alienating those most likely to recommend the service to their friends and family is a perilous strategy.

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